What is the ruling on selling currency for currency?
As long as the subject of the sale is currency for currency, it falls under the rulings of sarf (currency exchange). For sarf to be valid, it must be:
a) Present for present (Spot exchange): In this case, if the currencies are of the same genus, it must be hand to hand and in equal amounts. If they are of two different genera, it must be hand to hand, however you wish (in terms of amount). The evidences for this are well-known, including that the Messenger of Allah ﷺ said:
الذَّهَبُ بِالذَّهَبِ وَالْفِضَّةُ بِالْفِضَّةِ وَالْبُرُّ بِالْبُرِّ وَالشَّعِيرُ بِالشَّعِيرِ وَالتَّمْرُ بِالتَّمْرِ وَالْمِلْحُ بِالْمِلْحِ مِثْلًا بِمِثْلٍ سَوَاءً بِسَوَاءٍ يَدًا بِيَدٍ فَإِذَا اخْتَلَفَتْ هَذِهِ الأَصْنَافُ فَبِيعُوا كَيْفَ شِئْتُمْ إِذَا كَانَ يَدًا بِيَدٍ
"Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt, like for like, equal for equal, hand to hand. If these types differ, then sell as you wish, provided it is hand to hand." (Reported by Muslim through 'Ubada bin al-Samit).
b) Specific asset (ayn) for a liability (dhimmah): It is permissible to settle the price of a sale with the currency itself (the original price) or at the current day’s rate in another currency hand to hand. The evidence for this is the hadith of Ibn 'Umar: (...so I sell for dinars and take dirhams, and I sell for dirhams and take dinars, taking this from that, and giving this from that. So the Messenger of Allah ﷺ said:
لا بأس أن تأخذها بسعر يومها ما لَم تفترقا وبينكما شيء
"There is no harm in taking it at its price of the day as long as you do not separate with something still between you." This indicates the permissibility of substituting the price established as a liability (dhimmah). This is sarf involving a specific asset and a liability. However, immediate possession hand to hand is absolutely necessary.
c) Exchange of liabilities (sarf in the dhimmah): This is when one man owes another gold, and the other owes the first man silver, and they exchange what is in their respective liabilities. For instance, he settles the gold he owes with the silver the other person owes him as a debt. This is permissible because a present liability is like a present physical asset, provided the matter is settled in the same sitting. This issue is known in Fiqh as As-Sarf fi al-Dhimmah.
25 Dhu al-Hijjah 1424 AH 16/02/2004 CE